2010 a difficult year for tourist businesses
This tourist season's depleted passenger loads have taken their toll on several downtown businesses.
According to the Juneau Convention & Visitors Bureau, there were 876,456 visitors from all the cruise lines this season, including smaller ships. President and chief executive officer Lorene Palmer said this number does not take into account non-revenue passengers, such as ocean rangers, guest entertainers, officers' families and such. She said non-revenue passengers are estimate to be about 1 percent of the visitors.
This is about a 14 percent drop from last year's total of 1,020,708 passengers. Passengers were at their highest point in 2008, with 1,032,274.
"2010 was a challenging year because we started with 150,000 fewer passengers, so businesses had to manage this year in that new environment to kept expenses down. Many didn't hire new employees or get new equipment," Palmer said. "Businesses that did OK this summer did so partly because they managed this new environment."
"We're hopeful that in 2011 things will get better," she said.
This hope stems from the inclusion of three new cruise ships: Disney Wonder, Crystal Symphony and Oceania Regatta. However with the loss of two ships, Ryndam and Royal Princess, Palmer said 2011's net gain could only be around 14,000 passengers, which will not reach the numbers from the last few years.
Palmer did not say if this number involves losses from Cruise West, which went out of business Sept. 18. In 2010, Cruise West's passenger capacity for the cruises involving its four Juneau ships was 5,208, according to the Cruise Line Agencies of Alaska. Capacity does not always equal a passenger head count.
Several downtown stores that cater to the cruise industry felt the hurt from this season's depleted passenger total.
Toni Murphy, co-owner of Alaska-Juneau Mining Co., said her business was down in general, which she attributes to the lower passenger numbers. She said business has been "OK but not great" the last two years, but not as good as in 2008.
She said a disadvantage to stores like this that depend on tourism dollars is local shoppers don't support them enough to make up the difference when there are less tourists.
Tanja Cadigan, owner of Caribou Crossings, agreed. She said the passenger decrease combined with a soft economy led to many difficulties, essentially depriving stores of 15 percent of their business.
"This season was one of my most challenging seasons. If we had not seen that decrease and everything stayed the same we would have fared much better," she said.
Nor'Westerly manager Kristin McAdoo said people were spending money, but the problem was that there just weren't enough people.
"The people that were there were spending money, but there were just less people. Last year we were expecting to be down because of the economy but this year we had a positive attitude, and passengers were great but the volume wasn't there."
She said the store relies on tourists for about 95 percent of its business. She said this year she had to cut back on hiring and employees' hours.
Similarly, Daren Booton of Alaska Shirt Company, said it's also been a rough year in terms of passengers. He said the decrease has had a "trickle-down" effect, lowering his hiring and merchandise orders. He said he hired 15 percent fewer seasonal workers, which he said are always local employees.
Employee loss is another shared sentiment when there are fewer tourists.
"It's unfortunate but the first thing that goes in cutbacks is always the employees and hours, and that's less money they'll put back into the community," said Cadigan, who said she also has had to cut back on hiring.
A press release by the Alaska Alliance for Cruise Travel stated that at a recent Alaska Travel Industry Association annual conference, Commissioner Susan Bell announced economic data suggested the state would lose 5,000 jobs due to economic factors and less cruise ships this year. Also, 2,000 visitor industry jobs have been lost in Southeast Alaska after 2008. This data came from the McDowell Group.
Booten also said he believes the decreased passengers is not a result of the economy. "We messed up with the head tax and now we're seeing the full effect of it."
He said that while he hopes the passengers will rise again, he doesn't think the slight increase slated for 2011 will regain lost revenue.
"If we make less money we have less money to give," she said.
Cadigan, a member of the Alaska ACT, said the depletion from the downtown stores affects the whole city in the form of taxes. She explained that fewer passengers means that there are fewer sales taxes going back into the city. She said Juneau depends on those taxes being put to use by the city, making tourism sales relevant to everyone.
"It's unique because we have this very special industry that provides jobs as well as a strong economic impact on our community. The cruise passengers come in and spend money which eventually translates into more money for (city) coffers, which ultimately benefits every person in this community, and at the end of the season they leave," She said, "I'm proud to be affiliated with the cruise industry because of benefits it brings to our community,"
Cadigan said Juneau's infrastructure is built around a 1 million passenger baseline, which doesn't change when the number of passengers goes below that limit. Palmer also said that 1 million is the target passenger number per season.
Jim Calvin, a principal with McDowell Group, said the last research, done for the summer 2008 season, shows that $209.8 million was generated by the total visitor industry that year and about 80 percent of that was cruise-related, coming from spending from visitors, crew and other operators.
"Our research has shown that cruise spending creates substantial sales tax revenues," said Calvin, citing that taxes and payments come from those sales and the merchants providing goods and services.
"I am very concerned with how are we going to make up the reduced city tax income (for last season, this season and next), or what we are willing to give up in our community with less (city) revenue. Without an active effort to turn things around and bring the ships back, we may need to look at radical cuts or asking our residents to shoulder an unnecessary increase of paying for local services," Cadigan said.
John Binkley, president of Alaska Cruise Association, said, "On the bright side I'm optimistic that the changes the governor and legislature made to reduce head taxes and increase marketing will bring ships back to the market and bring back to where was in 2008."
• Contact reporter Jonathan Grass at 523-2276 or at jonathan.grass@juneauempire.com.